Indian domestic edible oil prices are expected to firm in coming months in line with global prices, which are likely to rise 5-10 percent from October, a leading industry analyst said.
Drab Misty, director of Godrej International Ltd, said prices had not risen recently, despite firming global prices, as plentiful arrivals of soya oil and palm oil in past months had created a situation of oversupply.
"I am quite bullish on the Indian market," Misty, whose comments and price projections are watched by traders, told Reuters on Sunday on the sidelines of an edible oil conference.
"I find too much baritones and despondency just because there are stocks in the ports," he added. "Already the international market has turned.
It is only the Indian market which is suffering from indigestion." The price of soya oil is currently around 34,200 rupees ($779) a tonne in the domestic market, down 20 percent from a year ago, while other oils like groundnut are lower by 10-13 percent.
In addition too huge import arrivals, prices have remained depressed because of adequate production of oils at home. India imports nearly half of its edible oil needs of about 11 million tonnes.
It buys palm oils from Malaysia and Indonesia and soft oils from Argentina and Brazil.
Mistry, who is based in London, said Indian edible oil imports in the new oil year beginning November would be close to the current year's imports of 5.65 million tonnes, including 250,000 tonnes of vanaspati, or hydrogenated vegetable oil.
India imported 4.8 million tonnes of oils in 2003/04. He said late rains in September had improved prospects of groundnut and soyabeans crops.
The Central Organisation for Oil Industry and Trade in its first forecast for the winter oilseed crop on Friday estimated output would increase to 13.04 million tonnes, from 12.36 million tonnes, mainly because of the good rains in September.
"But the rains have got to stop. Too much rains may not be too much of a good thing," Mistry said. He told the conference on Sunday Malaysian crude palm oil futures in October-February would be in the range of 1,400 to 1,600 ringgits a tonne.
Soya oil prices would also remain firm. Mistry projected a 5-10 percent rise in global prices from October onwards, as consumption would outstrip production.
"We are running into off-season for soya oils in South America, and Brazil becomes a non-exporter from October onwards. I believe the high cycle of palm production in Malaysia finished in July this year and a seasonal cycle has kicked in now."
Mistry said global demand was rising very fast because of a rise in demand for vegetable oils for green fuels, while production was not rising at the same pace.
This was leading to lower stocks and would translate into higher prices. "From mid-2006, the use of soya oil for bio-diesel will have a pronounced effect on prices," he said.
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